Three important things to know about PERS contracts and sales.

file0001131383239If you’ve decided to enter the vibrant market of selling Personal Emergency Response Systems (PERS) you may be wondering what advice a lawyer would give you on how to protect your business.   Do you need a contract with your customer?  If so, what should it say?  And are there any other special legal considerations for PERS?    Read on to find out.

First, do you need a PERS contract?

If you are selling PERS, then, yes, you need a contract.   Here is why:   Just as with any other alarm service, something could go wrong— the product itself could be defective, someone could wrongly use the product, or perhaps the response to the emergency should have been handled better (even if only in hindsight, or in the mind of the aggrieved).  This is particularly true when you are talking about a product marketed mainly to vulnerable individuals—the elderly and disabled.   And when something does go wrong, you could be caught in a legal dragnet, with a hard battle ahead trying to prove it wasn’t your mistake that caused the loss of life or injury.

Consider the case of an elderly woman who died in a Florida nursing home when her PERS did not activate properly.    Her estate sued the nursing home, the company that manufactured the PERS device, and the company that sold and monitored the device.    The claims centered around a dead battery in the PERS device, alleging alternative theories of liability–against the PERS device manufacturer for providing a defective device, against the nursing home for failing to adequately change or charge the device’s batteries, and against the seller for not providing adequate information about how to use the device.

Lawsuits similar to this are filed every day against burglar and fire alarm companies—the fact that they are now targeting PERS is no surprise.    If you find yourself in a situation where something does go wrong with the PERS you have sold or monitored, having a contract may make someone think twice about suing you, or get you out of a lawsuit if the court upholds your contract.

Second, what should a PERS contract say?

The old-contract standbys:  exculpatory clauses and subrogation waivers. 

Some terms in a PERS contract will be just like what you are used to seeing in the standard burglar and fire alarm contract:  the old standbys—exculpatory clauses and subrogation waivers.   The exculpatory clauses are the terms in your contract that say you won’t be liable for any losses, and if you are held liable the damages will be limited to a certain minimal dollar amount.   The subrogation waiver prevents your customer’s insurer from seeking to recover from you for harm caused to insured property (say, if Granny sets the house on fire and tries unsuccessfully to use her PERS to summon the fire department, and her insurer wants to recover from you the money it paid to repair the house).

Keep in mind that most jurisdictions will not enforce the limitation of liability or limitation of damages, and sometimes even the subrogation waiver, if the company’s conduct is found to be willful or grossly negligent.  So, as usual, be on your best behavior, follow all company policies, and procedures, and all applicable laws, rules, and regulations.

Third, are there other special considerations for PERS contracts and sales?

While some of the contract terms will be the same as your fire and burglar alarm contract, the PERS contract should not be identical.   There are several special considerations for PERS contracts and sales.

  • Make sure the contract applies to both purchaser and the user.

Many times, the PERS is purchased by someone who is different than the user.  Say, for example, when an adult child purchases PERS for an elderly parent.  Thus, your customer is both the purchaser and the user—and your contract should be written so that it applies to both.

  • The simpler the better.

This is good advice for any contract, but it rings especially true in the PERS context.   If Granny comes to court with a contract riddled with legalese, in 6-point font, with essential terms hidden on page two under a heading that makes no sense, you can bet the court will be loath to enforce it.  In short, make sure your contract is in language that can be easily understood, and that your limitations of liability and damages, and subrogation waiver are prominently featured.

  • Get the relevant medical information and permission to use it.

You’ll need an extra form for the PERS user to fill out any pertinent medical information that may be useful in an emergency.  For example, have the user give his or her medications and dosages, drug or other allergies, medical conditions, and names of physicians.  You should also include language in the contract that states that the user will provide this information and keep it up to date, and that you have permission to share it with your agents (e.g, the monitoring center) and emergency services.

  • Spell out who is called if the PERS is activated. 

Similar to the call list for burglar and fire alarms, you will need a list of contacts for when the PERS is activated.  With PERS, however, some users will want 911 called immediately if the PERS is activated, while others will want a family member or neighbor called first.  It is vital that you have this information spelled out in detail, including the procedures that will be followed if you cannot reach the people on the list.

  • Be careful of automatic renewals.

It’s no secret that I am not a fan of automatic renewals (your customers are not either judging from what I hear through my blog).  But, particularly with PERS, long-term contracts with automatic renewals make no sense.  I advise that you renew the contract monthly.  And you should give your customer an easy way to cancel the contract if the user no longer needs it, due to death, hospitalization, or nursing home entry.  At a minimum, make sure you comply with your state’s law regarding automatic renewals.

  • Home solicitation disclosures.

If you are selling PERS through home solicitations, make sure you comply with your state’s home solicitation laws.  This likely means you need special “right to cancel” language in your contract that allows the customer to cancel within three business days, and a handout for the customer that spells out the right to cancel and how to do so.   Look at your state’s law and follow it.

  • Licensure requirements.

Some states have special licensure requirements for selling PERS, which are different than the licensure for selling burglar and fire alarm systems.  Make sure to look at your state’s law and comply with all applicable requirements.

If PERS is a new business venture for you—be smart and protect your business as best you can with an iron-clad contract.